My GDP

Thursday, August 16, 2012

There are said to be billions circulating through global supply chain (2 billion in the United States alone). Some 80 percent of all U.S. commerce is carried on pallets. So widespread is their use that they account for, according to one estimate, more than 46 percent of total U.S. hardwood lumber production.

Think Costco. Oh yeah, those things.

Companies like Ikea have literally designed products around pallets: Its “Bang” mug has had three redesigns, each done not for aesthetics but to ensure that more mugs would fit on a pallet (not to mention in a customer’s cupboard). After the changes, it was possible to fit 2,204 mugs on a pallet, rather than the original 864, which created a 60 percent reduction in shipping costs.

According to an article in a 1931 railway trade magazine, three days were required to unload a boxcar containing 13,000 cases of unpalletized canned goods. When the same amount of goods was loaded into the boxcar on pallets or skids, the identical task took only four hours.

In addition to the political spin, we have the intricacies of statistics to wade through. The new unemployment rate is 8.3 percent. That's up from 8.2 percent last month. That's the number that gets all the notice and noise. So it's up, and that's bad for Obama, unless the media can spin the heck out of it.

But let's look behind the number. First of all, according to the Labor Department, 163,000 new jobs were created in July. Economists had expected only 100,000 -- so that's good, right? Well, no -- it's going to take a lot more than that to get the unemployment rate down.

And that number of new jobs is completely artificial. The Labor Department always adjusts the number to reflect seasonal issues, such as teachers not teaching in the summer. So ... in reality, the actual number of Americans working dropped by 195,000, with the net job gain resulting primarily from seasonal adjustments. They do that so the number doesn't jump around wildly, like some people I know.

You have to real careful reading the newspaper, if any still exist.

At the top of page one of The Wall Street Journal today we had:

Economy Adds 163,000 Jobs

U.S. payrolls increased by a seasonally adjusted 163,000 jobs last month, the Labor Department said Friday, but the unemployment rate ticked up one-tenth of a percent to 8.3%.

Then later in the morning it was changed to:

Hiring Climbs but Jobless Rate Ticks Up

The U.S. economy added more jobs in July than in any month since February, but the unemployment rate ticked up, suggesting the U.S. recovery remains too weak to bring down high unemployment.

See what I mean? Would you take one of those "seasonally adjusted" jobs? I wonder if you get seasonally adjusted coffee breaks.

Some groups in the population are suffering even more. Unemployment for blacks fell from 14.4 percent to 14.1 percent, while the rate for Latinos slid from 11 percent to 10.3 percent. The unemployment rate for teenagers edged higher to 23.8 percent.

And the people I'm always concerned about, because I'm one of them, are those who are underemployed or who have just given up looking. A measure that takes into account those who have stopped looking for jobs as well as those working part-time for economic reasons has hovered well above the headline rate that only counts the unemployed actively looking for jobs. That more encompassing rate edged higher to 15.0 percent.

It's an important number, because if you just give up looking for work, you actually contribute to making the basic unemployment rate look better.

Thursday, July 12, 2012

Nearly seven years after the housing bubble burst, most indexes of house prices are bending up. "We finally saw some rising home prices," S&amp;P's David Blitzer said a few weeks ago as he reported the first monthly increase in the slow-moving S&amp;P/Case-Shiller house-price data after seven months of declines.

Nearly 10% more existing homes were sold in May than in the same month a year earlier, many purchased by investors who plan to rent them for now and sell them later, an important sign of an inflection point. In something of a surprise, the inventory of existing homes for sale has fallen close to the normal level of six months' worth despite all the foreclosed homes that lenders own. The fraction of homes that are vacant is at its lowest level since 2006.

The reduced inventory of unsold homes is key, says Mark Fleming, chief economist at CoreLogic, a housing data-analysis firm. For the past couple of years, house prices have risen in the spring and then slumped; the declining supply of houses for sale is reason to believe that won't happen again this year, he says.

Thursday, June 21, 2012

The so-called Bush tax cuts are set to expire at the end of the year, Investor's Daily reports.

That means that all of the current income tax rates will rise to pre-2001 levels overnight. The lowest rate will jump from 10% to 15% and the highest from 35% to 39.6%. Although Congress extended all of the cuts at the end of last year, some Democrats have pledged to let the tax cuts expire for the "rich" — individuals making $200,000, and $250,000 for families.

Pre-2001, dividends had been taxed at workers' income tax rate. The Bush tax cuts dropped the rate on dividends and capital gains to 15%. Thus, if the Bush tax cuts expire, the dividend tax for high-income workers will jump to 39.6%.

But there's more. The health care law imposes a new 3.8% tax on passive income, including dividends and interest. So the effective dividend tax rate for those at the upper end of the income scale would nearly triple, to 43.4%. Happy New Year!

And don't forget that dividends have already been taxed as corporate profits — so they're taxed twice.

Although proponents claim that these tax increases will only affect the wealthy, this looming tax grab will also have a significant impact on middle-class Americans who don't have to pay it directly. And the impact could weaken America's fragile financial markets further and unintentionally erode the value of the savings of millions of Americans.

Companies looking to expand their operations and create jobs, of course, are likely to think twice before doing so in high-tax locales.

Heightened dividend taxes won't just hamstring overall economic growth. They'll also hit individual investors where it hurts — in their pocketbooks. Dividend income for some investors could drop by 33%. And it won't affect only the high-income workers.

For starters, higher dividend taxes will make stocks that pay dividends less attractive to investors. So those who currently hold dividend-paying stocks — everyone from middle-class folks with 401(k)s to union pension funds to non-profit foundations — would see the value of their investments decline substantially.

Further, higher dividend taxes will likely cause companies to cut dividends in favor of deploying their cash in other ways, like re-purchasing their own stock. So individuals counting on their share of a company's profits for their income — which they'd normally receive via cash dividend — could find themselves out of luck.

That would be particularly bad news for retirees, many of whom depend on dividends as a staple of their fixed incomes.

According to the IRS, more than half of dividend payments go to Americans over age 65 — and almost 75% go to those over age 55.

"This is the first generation in history to retire depending primarily not on defined benefit plans but rather on contribution plans that are disproportionately comprised of dividend income," notes former New Hampshire Sen. Judd Gregg.

"It will be a bitter pill to swallow for a lot of people whose only pathway to adjusting to their reduced income will be through a commensurate reduction in their standard of living."

Saturday, June 9, 2012

And we don't even admit we have a problem. Workers often compete to see who has less of a life than the next guy.

Americans work more than anyone else. In fact, we work 100 hours more per year than the famously nose-to-grindstone Japanese. And we put in up to three months a year more than Europeans.

America is the only country that does not mandate paid vacation leave. China gets three weeks. Europe averages six.

Call it the incredible shrinking vacation. The average vacation in America now numbers a pathetic three to four days—a long weekend. And this year, according to a recent survey, one in seven Americans is taking no vacation at all.

Second, maybe the reason is, duh, money, from former President Clinton:

"Median income, after inflation, is lower than it was the day I left office. So those people who would be affected by that, many, many of them have had no income increases in a decade while their costs have gone up. So you really would have a contractionary economic impact. It would be very bad for the economy if those folks in the bottom 98% had to shoulder a tax increase."

That would be a tax increase advocated by your President, what's his name.

For the sixth year in a row, tuition at the University of Wisconsin’s four-year campuses will go up by the state’s legal maximum of 5.5 percent. Students at the four-year campuses can plan on budgeting an extra $400 for their tuition during the coming year, with no increase in financial aid.

Obamaman really did not mis-speak when he said "the privae sector is doing fine." He meant it in relation to the public sector, which has been losing unionized workers paid more than average non-union workers and who contribute to the Democratic Party. He meant it.

The belief that the private sector is rich and the public sector is poor, so that transfers of wealth from private sector to public sector are endlessly justified, is embedded deeply in Obama’s ideology. Most everyone knows that times have changed. Government spending consumes an ever-growing share of America’s wealth, and study after study shows that public sector workers are paid vastly better than private sector workers. In today’s world, opulence is far more a feature of the world of government than of private industry. But this is a fact around which leftists like Barack Obama simply cannot wrap their minds. They cling bitterly to the old stereotypes, because to do otherwise would call into question their entire worldview. To them, the private sector is always “doing fine;” if anything, in their hostile eyes, too well.

Friday, May 18, 2012

A commentary by Simon Black, international investor, entrepreneur, permanent traveler, on how we treat successful people in the United States:

I’ve been in the US for a little more than 24-hours. And having flipped through the TV channels trying to figure out what useless drivel big media is passing off as ‘news’, I realized that I’m going to vomit if I hear the word “fair” one more time.

This concept of ‘fair’ seems to be dominating discussion of the US government’s dismal fiscal condition. The talking heads say that it’s ‘fair’ for wealthy Americans to pay higher taxes and bail the country out… or that everyone needs to pay his/her ‘fair’ share.

The whole logic is absurd: you do not ‘fix’ the country’s fiscal imbalances by giving the idiots in charge even more resources to squander… it’s like dumping gasoline on a forest fire. Somehow the debate seems to have missed this point.

This ‘fair’ nonsense is also very dangerous. Just ask any three-year old– ‘fair’ is completely arbitrary. It’s like a Wiki version morality… if enough people agree on it, it’s fair.

In this case, ‘fair’ is defined in the sole discretion of those who are the direct beneficiaries of confiscating other people’s money. But let’s look at the numbers:

According to the IRS statistical database, the top 1% of income earners in the United States pays roughly 40% of all US individual income tax. They also get audited at least 5-times more than anyone else. Fair?

The other major complaint seems to be that the wealthy are ‘abusing’ capital gains rules in order to pay a 15% rate instead of a 35% rate. Duh. That’s why they’re wealthy, and stay wealthy… they don’t WORK for a living, they OWN assets which are subject to capital gains.

It seems so bizarre that a country once regarded as the freest, most economically enviable in the world would treat its productive citizens with such hostility.

This is where Eduardo Saverin comes in. The Facebook co-founder, who finds himself a few billion dollars richer this week, recently renounced his US citizenship. And, to the intelligentsia, it’s not ‘fair’.

‘Saverin needs to pay his fair share! He owes America more,’ they whine, completely ignorant that the 30-year old is already forking over a $500+ million exit tax (which may end up in the billions).

Apparently it’s not good enough that the company Saverin co-founded has created tens of thousands of jobs, spawned entire industries, and produced oodles of new millionaires. Oh yeah, it’s also made things damn easy for the CIA, NSA, and FBI. You’d think Uncle Sam would pin a medal on his chest.

But no. Saverin left behind a lot of value and decided to move on to greener pastures in Singapore. Now the do-gooders in Congress are cooking up new legislation (the EX-PATRIOT Act) designed to permanently bar ‘renunciants’ like Saverin from re-entering the United States.

It’s interesting that, rather than change their ways of doing business and introducing legislation that provides incentives for productive people to come here and stay here, they maintain policies that chase people away, and introduce new ones to lock the door after they’re gone.

The lesson here (especially for natural-born citizens) is this: simply by accident of birth, you are born with a lifelong obligation that you never signed up for to finance the corrupt misdealings of the political class. And if you choose to abandon this obligation, they will bar you from ever entering your homeland again.

Regardless of what the propaganda says, this is not how a free society treats people. It might look and feel like a representative democracy on the surface, but under the hood it’s the modern day equivalent of feudal serfdom.

Tuesday, May 8, 2012

David Ignatius of The Washington Post sees a pretty happy future for our economy. It has to do with energy independence, as I posted recently, and also a new future for manufacturing

Energy security would be one building block of a new prosperity.

The other would be the revival of American manufacturing and other industries. This would be driven in part by the low cost of electricity in the U.S., which West forecasts will be relatively flat through the rest of this decade, and one-half to one-third that of economic competitors such as Spain, France or Germany.

The coming U.S. manufacturing recovery is the subject of several studies by the Boston Consulting Group. I’ll focus here on the most recent one, “U.S. Manufacturing Nears the Tipping Point,” which appeared in March.

What’s happening, according to BCG, is a “reshoring” back to America of manufacturing that previously migrated offshore, especially to China. The BCG analysts estimate that by 2015, China’s cost advantage will have shrunk to the point that many manufacturers will prefer to open new plants in the U.S. In the vast manufacturing region surrounding Shanghai, total compensation packages will be about 25 percent of those for comparable workers in low-cost U.S. manufacturing states. But given higher American productivity, effective labor costs will be about 60 percent of those in America – not low enough to compensate U.S. manufacturers for the risks and volatility of operating in China.

In about five years, argue the BCG economists, the cost-risk balance will reach an inflection point in seven key industries where manufacturers had been moving to China: computers and electronics, appliances and electrical equipment, machinery, furniture, fabricated metals, plastics and rubber, and transportation goods.

The industries together amounted to a nearly $2 trillion market in the U.S. in 2010, with China producing about $200 billion of that total.

As manufacturers in these “tipping point” industries move back to America, BCG estimates, the U.S. economy will add $80 billion to $120 billion in annual output, and 2 million to 3 million new jobs, in direct manufacturing and spinoff employment. To complete this rosy picture, the analysts forecast that in about five years, U.S. exports will increase by at least $65 billion annually.

Hold on, Dr. Pangloss. Those are just economists’ estimates. What do real manufacturers say? Well, BCG has some new numbers on that, too. In late April, the consulting firm released a survey of executives at 106 U.S.-based companies with annual sales of over $1 billion. Thirty-seven percent of them said they were planning to reshore manufacturing operations or “actively considering” the move. Among larger companies with sales over $10 billion, the positive response rose to 48 percent.

Monday, May 7, 2012

With so much talk these days of America’s decline, it may sound strange to ponder the prospects for an American economic boom a decade or so from now. But that’s the thrust of two new studies, David Ignatius of The Washington Post writes.

America is entering a new era of energy security: My expert here is Robin West, a friend who is chairman of PFC Energy, a Washington-based advisory group. He argues in a series of recent reports to clients that because of the rapid expansion of oil and gas production from shale, America is likely to become by 2020 the world’s No. 1 producer of oil, gas and biofuels – eclipsing even the energy superpowers, Russia and Saudi Arabia.

West explains that the natural-gas boom will mean a dramatic change in energy imports and, thus, the security of U.S. energy supplies. He forecasts that combined imports of oil and natural gas will fall from about 52 percent of total demand in 2010 to 22 percent by 2020. The totals are even more impressive if supplies from Canada are included.

“This is the energy equivalent of the Berlin Wall coming down,” contends West. “Just as the trauma of the Cold War ended in Berlin, so the trauma of the 1973 oil embargo is ending now.” The geopolitical implications of this change are striking: “We will no longer rely on the Middle East, or compete with such nations as China or India for resources.”

There you go, boys and girls. This is as big is the end of the Cold War threat of nuclear war, for those of us who lived most of our lives under that cloud. Go out and buy yourself an SUV.

Once again, just making sure everyone understands the sickening farce that is the "unemployment figure." I said last year that the reported "unemployment number" would be UNDER EIGHT PERCENT no matter what in Q4 2012. Sure enough, it appears that I will be proven exactly right. Is this because unemployment is going down? HELLZ NO! Real unemployment is climbing consistently, and is probably north of 20%.

The entire Obama regime propaganda on unemployment is driven by the fact that they keep REDUCING THE SIZE OF THE WORKFORCE. People can only collect unemployment benefits for 99 weeks. As soon as a person goes beyond 99 weeks, the Obama regime declares that person as NO LONGER IN THE WORKFORCE.

There are people who have been unemployed for over two years who would work if they could find anything, but the rat bastards in the Obama regime and their propaganda arm, the media, just evaporate these people from existence, and they additionally reduce the size of the labor force arbitrarily, just so they can hit whatever predetermined number Valerie Jarret, David Axelrod, Timmy Geithner and Ben Bernanke decide it is going to be.

This is what they are doing on every single unemployment report. It is all as fake as a Thai Rolex. Eventually, the Obama regime will go full-Marxist stupid, drop the labor force to 52 million and declare that Great Leader Obama has delivered a FULL EMPLOYMENT ECONOMY. And anyone who dares disagree will be shot in the back of the head with one of those 450 million rounds of .40 cal that the Obama regime just ordered.